Thursday, July 23, 2009

How a monopoly gambling franchise can lose money.

Saddled with debts of $46 million and facing mounting losses each day, New York's beleaguered Off-Track Betting Corporation is considering the unthinkable -- bankruptcy...

Sources said that was one of the options discussed in a hastily called meeting of OTB's board of directors on Tuesday. "It's sort of a logical thing to look at when you're paying out more than you take in," said one source...

OTB officials have been desperately juggling payments to keep the city's only legal bookie afloat through the summer. "Right now they're robbing Peter to pay Paul," said one official.

OTB is operating with a negative cash flow of $600,000 to $800,000 a month on a betting handle of $900 million a year, largely because of a revenue-sharing formula dictated by Albany that forces it to pay out more than it takes in after operating expenses...

OTB is a public-benefit corporation created by the state ... Perhaps most troubling to the workers and OTB retirees is that their future medical benefits, worth an estimated $200 million, could be wiped out... [NY Post]

Wow, the politicians force it to pay out more than it takes in -- that's clever financial mangement!

(If only these same politicians could run a single-payer government health care program and control its costs ... oh, wait, they do!)